South Korea's unease over cryptocurrency trading follows drastic moves taken by China, which shuttered cryptocurrency exchanges past year and is now trying to shut operations that produce bitcoin, a process known as mining. "In addition to developments in China, South Korean Finance Minister Kim Dong-yeon reiterated on Tuesday that the government is actively considering an outright ban on crypto trading." .

Speaking at a meeting between internet regulators and policymakers last week, People's Bank of China (PBOC) vice governor Pan Gongsheng recommended the government to keep putting pressure on digital currency markets.

Even as market participants were breathing easy, the cryptocurrency universe experienced a setback, with majority seeing a sharp pullback today.

However, small peer-to-peer payment systems are not being targeted. Now, the cryptocurrency market cap has hit $590 billion. Ethereum, Ripple and the Bitcoin Cash lost respectively 12.41%, 19.16% and 15.51% early Tuesday. The cryptocurrency's market capitalization now stands at around $198 billion, according to Reuters.